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Monday, February 10, 2014 – Set the Tone

Set the Tone by Sinclair Noe DOW + 7 = 15,801SPX + 2 = 1799NAS + 22 = 414810 YR YLD + .03 = 2.69%OIL + .12 = 100.00GOLD + 7.90 = 1276.00SILV + .07 = 20.18 A little bit of follow up to last Friday’s jobs report, which you recall came in at 113,000 jobs added in January and the unemployment rate dropping to 6.6%. There was a huge discrepancy between the household survey and the business establishment survey; the household survey showed 616,000 new jobs. The household survey can be a bit volatile and is considered less reliable. There is also a discrepancy between the establishment survey and a couple of earlier reports from ISM and ADP. The Institute for Supply Management services index came in at 56.4% in January, indicating a strong month for service jobs. The ADP, or Automatic Data Processing, employment report indicated 160,000 private sector service jobs were created in January, or about 100,000 more jobs than the government reported. It will be very interesting to watch revisions to the jobs report next month. The major stock indices just loved the lousy jobs report, and this is a head scratcher for many people. Why would bad news on jobs be good news for stocks? Well, a weak job market gives employers the upper hand because most workers will accept lower wages, which translates into higher profits for corporate America. I know that is short sighted because the workers are also customers, but in the …

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Thursday, February 06, 2014 – Waiting on the Friday Jobs Report

Waiting on the Friday Jobs Report by Sinclair Noe DOW + 188 = 15,628SPX + 21 = 1773NAS + 45 = 405710 YR YLD + .04 = 2.70%OIL + .57 = 97.95GOLD + .20 = 1258.80SILV + .05 = 20.05 The number of Americans filing new claims for unemployment benefits fell more than expected last week. Initial claims for state unemployment benefits declined 20,000 last week to a seasonally adjusted 331,000. There have been some interesting reports this past week on jobs, including the controversial research from the CBO and the other from the New York Fed. Competition for jobs is still fierce. Although it varies with the company and the job, on average 250 resumes are received for each corporate job opening. In addition, out of every 1000 people who view an online job posting, 100 people will apply, 4 – 6 will be selected for an interview, 1 – 3 will be invited for a final interview, 1 will be offered the job, and 80% of those who get a job offer accept it. The Wall Street Journal shows how the very backbone of the labor market, men in their prime (for measurement purposes, 25 to 54), are out of work to an unprecedented degree. More than one in six men ages 25 to 54, prime working years, don’t have jobs—a total of 10.4 million. Some are looking for jobs; many aren’t. Some had jobs that went overseas or were lost to technology. Some refuse to uproot for …

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Friday, January 24, 2014 – Bulls, Bears, and Bonuses

Bulls, Bears, and Bonuses by Sinclair Noe DOW – 318 = 15,879SPX – 38 = 1790NAS – 90 = 412810 YR YLD – .04 = 2.73%OIL – .41 = 96.91GOLD + 4.40 = 1270.00SILV – .11 = 20.01 The Dow has fallen every day this week, leaving it down more than 3%. That decline is the Dow’s worst weekly performance since mid-May 2012. Meanwhile, the S&P 500 is down 2.5% since last Friday. That’s the index’s worst weekly slide since early November 2012. All of the sudden, everybody seemed concerned about political and economic problems in Turkey, Argentina, and of course, China. The Turkish lira hit a record low and the South African rand fell to five-year low against the dollar. The Argentine peso had its sharpest decline in 12 years, going back to the 2002 financial crisis in that country; and the government abandoned its long standing policy of intervening to support the peso currency. Such moves are crucial factors for big, institutional foreign investors because exchange rate losses can easily wipe out any gains in stocks and bonds of emerging countries. Right now, the losses haven’t turned into a rout, but there is concern that the turn may push big institutional investors to cut losses and run as the effect of falling currencies becomes too painful to bear. Every emerging market crisis is first-and-foremost a currency crisis. For example, South African government debt was slightly positive in rand terms in 2013. But in dollars terms, it lost more …

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Deficits, Militarization, Privatization, Financialization by Sinclair Noe DOW – 126 = 14,995SPX – 13 = 1612NAS – 36 = 340010 YR YLD + .03 = 2.23%OIL + .38 = 95.76GOLD + 10.20 = 1389.40SILV + .10 = 21.89 Pretty much all markets looked a little weak today, except maybe precious metals, but its hard to call that market strong right now. Quantitative easing, the $85 billion per month shelled out by the Federal Reserve, comes down to the purchase of two kinds of securities: Treasury paper and mortgage-backed securities. The Fed buys the Treasury paper from the federal government and the mortgage-backed securities from commercial banks. The first is a direct form of monetization (money printing); the second is an indirect form since a good portion of those funds is in turn also used by the banks to purchase Treasury paper. The two together comprise the bulk of what appears on the Fed’s balance sheet as “reserve bank credit”; that figure stands at just over $3.2 trillion; up about $2.4 trillion since late 2008. At first glance, it looks like reserve bank credit and the gold price are correlated, but what is really going on with this tandem is that they are both being pushed by the same force – a bad economy. It causes the Fed to print money and investors to buy gold. The government reported Wednesday that the US budget deficit widened in May by $139 billion. But the annual deficit stayed on track to finish below …

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